EU countries must power neighbours during shortages, under new rules

Boosting LNG in the EU is a cornerstone of plans to bolster energy security. [Shell/Flickr]

European Union countries will be obliged to help power households and social services such as healthcare in neighbouring member states in case of severe shortages, under legislation to be put forward by the European Commission next week.

This “solidarity principle” was described as a “big shift” by EU sources, who said the new draft rules would also encourage much greater uptake of liquefied natural gas (LNG) in the bloc.

“To prevent future gas supply crises, national policies are not enough,” the source said.

LNG infrastructure already built in the EU was only operating at 20% capacity. Increasing that would make the EU less dependent on unreliable suppliers such as Russia, the source said. In 2006 and 2009, Russian state monopoly Gazprom turned off the taps to Ukraine, which is a vital transit country to the EU.

The Energy Security Package, to be launched on 10 February, builds on the EU’s Energy Union strategy, which aimed to bolster the bloc’s resistance to shortages and its fight against climate change.

It also includes measures to vet intergovernmental energy agreements and commercial contracts to ensure compliance with EU law and Energy Union goals – a response to controversies over pipeline projects like South Stream and Nord Stream 2. The package will ultimately have to be agreed by member states before becoming law. 

Solidarity plan

The EU will be divided into nine regions of neighbouring countries, based on proximity and ability to pool resources, with the only exceptions being the energy islands of Malta and Cyprus. For example, the UK and Ireland form one region, Belgium, France, Luxembourg, Netherlands, Portugal and Spain another, and Czech Republic, Germany, Poland and Slovakia another. Bulgaria, Greece and Romania are one region, and the Baltic and Scandanavian countries are a further two. 

But to be successful, interconnectivity between countries – notoriously difficult to achieve – will need to be much improved. France, for example, has historically been very resistant to opening is nuclear-dominated energy market to renewables from the Iberian Peninsula, missing EU-set targets.

>>Read: Energy union aims for elusive 10% power grid interlinkage

Varying household and business energy bills in different countries, which could be relevant in energy-sharing, would be looked at in a separate, later initiative.

Plans pushed by then Polish President and now European Council President Donald Tusk to encourage joint energy buying among single-supplier member states are not included in the package.

Willing countries could pursue that option by themselves but only if concerns over World Trade Organisation rules were respected, EU sources said.

LNG and COP21

Increasing LNG shipments to the EU would help diversify energy suppliers, weaning the EU off its Russian gas addiction, sources said. Countries such as Australia were now world leaders in LNG, with other options including potentially Iran or Turkey coming onto the global market in the future.

Prices for LNG, which is typically shipped, were beginning to converge with pipeline natural gas prices, they added. The falling oil price also made LNG more attractive. 

Last December’s UN Climate Change Conference (COP21) in Paris was hailed as a clear signal that the path to clean energy was irreversible. Governments set a landmark worldwide two degree limit on global warming above pre-industrial levels, with an ambition to cap it at 1.5 degrees.

>>Read: COP21 celebrations, but governments must mind the emissions gap

The COP21 pact will this year be taken into consideration, when the Commission puts into draft EU law its 2030 climate and energy goals to cut greenhouse gases, boost energy efficiency, and increase renewables.

But championing LNG, a fossil fuel causing lower emissions than oil or coal, to bridge the transition to a green economy will draw criticism from environmental campaigners.

“The plain fact is gas is a fossil fuel, and incompatible with the goals of the Paris Agreement. If the Commission wants to live up to their successes in Paris, it has to make it clear that demand reduction and renewables are the most important elements in Europe’s LNG strategy,” said Brook Riley, of Friends of the Earth Europe.

The executive’s own analysis shows that moderate energy efficiency improvements can slash gas consumption by a quarter over the next 15 years. 

The Commission has promised to put “energy efficiency first”, and to make the EU a “world leader in renewables”. If successful in those goals, demand for gas will likely drop, theoretically increasing the risk of stranded assets.

The package includes a strategy to boost energy efficiency in heating and cooling, which is responsible for more than half the EU’s gas consumption.

Higher 2030 targets would lead to a decline in gas consumption, the source said. But the package only planned a few new LNG hubs in the EU, which would receive money from Brussels.

The infrastructure was already built. It was just not being used to capacity, the source added. Better interconnections would make LNG more competitive, and gas could help decarbonise the transport sector. 

LNG is also typically transported by ships. International shipping was one sector not covered by the COP21 agreement. NGO Transport & Environment have warned that without shipping emissions being cut, the two degree target will not be met.

EU sources conceded there was no way of finding out what impact increased LNG shipping would have on the environment, without a global deal which would allow ship emissions to be calculated.

Contract scrutiny

Another controversial measure is the Commission’s desire to vet intergovernmental energy agreements (IGA) and commercial contracts to ensure they agree with EU law and the Energy Union goals.

>>Read: EU seeks new powers to vet member state energy deals

Sources said that commercial agreements were not transparent enough. Information demanded would focus on that needed to risk-assess the bloc’s energy security, sources said.

New rules would mean governments would have to take “upmost account” of the Commission’s mandatory compatibility check on the IGAs. The checks would happen before the deals are signed.

The planned expansion of the Nord Stream Baltic Sea gas-pipeline is currently under Commission scrutiny to ensure it complies with EU law.

Nord Stream 2 is a Gazprom project and backed by Germany and Austria. But, EU sources said, “It’s a project that doesn’t fit in with our strategy.”

It would increase Gazprom’s market share from 40% to 60%, making the region more dependent on Russian natural gas, a source said.

“We want the Ukraine to remain a transit country,” the source added.

It will be difficult for the Commission executive to overturn the project, as it would have to find a legal approach that would allow it to influence national authorisation procedures. 

But the executive can ensure and enforce its compliance with EU law. EURACTIV understands the project is being assessed to see to what extent rules in the EU’s third energy package apply to offshore pipelines.

>>Read: Putin and Gabriel team up on Nord Stream 2 against Brussels

Transport & Environment said, "LNG is not a silver bullet for the industry because it's still a fossil fuel that releases methane, a powerful global warming agent, 23% more polluting than CO2. EU funding should be used in line with the overall EU climate targets and be channeled properly so that it helps decarbonise the transport sector and not subsidise another fossil fuel."

When he was Prime Minister of Poland, Donald Tusk spearheaded the idea of an EU Energy Union. The idea has since been taken up by the European Commission, which nominated a special Commissioner, Maroš Šef?ovi?, to steer the project.

Details of the proposal started to emerge in February 2015, when the College of Commissioners discussed the plan for the first time. A first communication was published on 25 February, and included an annex of “concrete proposals”, including a list of priority infrastructure projects eligible to receive EU funding.

Šef?ovi? followed up in November, by laying down legislative plans until the end of the Commission's term in 2019.

>>Read: Commission outlines Energy Union legislative path

The Energy Union will cut across a number of policy sectors including energy, transport, research and innovation, foreign policy, regional and neighbourhood policy, trade and agriculture, according to the EU executive's plans.

>>Read: EURACTIV's full coverage on the Energy Union

Last December’s UN Climate Change Conference (COP21) in Paris was hailed as a clear signal that the path to clean energy was irreversible. Governments set a landmark worldwide two degree limit on global warming above pre-industrial levels, with an ambition to cap it at 1.5 degrees.

>>Read: EURACTIV's COP21 coverage

  • 10 February: College of Commissioners due to approve Energy Security Package, which will then be unveiled.

European Commission

Subscribe to our newsletters